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'SAA need at least R20bn to possibly break even'

Wed, 25 Apr 2018 2:58 PM

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Deputy Finance Minister Mondli Gungubele. Credit: GCIS.

Deputy Finance Minister Mondli Gungubele says South African Airways (SAA) will need at least R20 billion in order to possibly break even in three years’ time.

Gungubele is co-chair of the oversight body that is monitoring efforts to turn the national carrier around.

He revealed the figure on Wednesday morning while addressing Parliament’s Standing Committee on Appropriations, where SAA executives and board members are also briefing Members of Parliament (MPs) on efforts to restructure SAA.

Gungubele says SAA now has a clear turnaround strategy aimed at fixing its finances, corporate governance and operating model.

But he says that SAA needs money to keep afloat and restructure.

“By March 2019 the R9,2 billion will have matured as a debt, which must be paid to the funders. Over and above that, R12 billion would be required. All that together makes about R20 or R21 billion. With that in place, we are very positive that we are going to be on a path that will help us break even in 2021.”

SAA is in talks with the National Treasury and banks about arranging an open credit line.

SAA CEO Vuyani Jarana told the Standing Committee on Appropriations that SAA has already taken on more debt than it can carry, and that any financial aid will have to be “a mixed model”.

“We want to highlight this; debt alone is not the answer for SAA in the business model we have put together.”

SAA posted a loss of R5,6 billion in the 2016/17 financial year.

Gungubele says its losses for 2018 will come in at more than R5 billion and that its projected loss for 2019/20 is around R2 billion.